Aidan,

When you say crap like "both nuclear and renewables would be able to cover the capital costs but not the financing costs" Then I know that you are completely clueless, as the cost of capital and financing costs are intertwined.

"What is 'Cost Of Capital'
The cost of funds used for financing a business. Cost of capital depends on the mode of financing used – it refers to the cost of equity if the business is financed solely through equity, or to the cost of debt if it is financed solely through debt. Many companies use a combination of debt and equity to finance their businesses, and for such companies, their overall cost of capital is derived from a weighted average of all capital sources, widely known as the weighted average cost of capital (WACC). Since the cost of capital represents a hurdle rate that a company must overcome before it can generate value, it is extensively used in the capital budgeting process to determine whether the company should proceed with a project"

Essentially the cost of capital is the cost to repay the financing costs or cover sufficient return on the equity invested. The minimum expected is to cover the repayment of the investment plus interest and a small profit over the expected lifespan of the project.

For example, based on existing installation costs and generation of wind power, a $100m loan would be needed to build 30MW of installed wind generation capacity which would generate on average about 7000 MWhrs.

The costs on capital assuming a heavily subsidized 2% interest over 20yrs would be $370 000/m or $53 per MWhr or 5.3c/ kWhr, which is already more than the average cost for coal fired generation. Next you need to add roughly $20/MWhr for maintenance, and more for operational staffing etc, and eventually profits, and you end up with a cost of generation of > $100/ MWhr compared to coal fired stations that feed in at less than $40/MWhr.

Those of you following this thread may be interested in listening
to this talk with James Kunstler and Alice J. Friedemann who is the
author of “When Trucks Stop Running: Energy and the future of Transportation.”

http://traffic.libsyn.com/kunstlercast/KunstlerCast_278.mp3

The last third of the discussion is directly about electricity grid
generation. One interesting morsel to me was that diesel rail
locomotives are more efficient than electrified track long haul
electric locomotives, after taking into account substations etc etc.

The US has a similar layout of cities and country, except on a larger
scale as far as population is concerned and it may well have some
lessons for us.
Forget some preconceived notions that we all have, the futrure will
not be similar to the past no matter what.

Shadow,

I'm well aware of that. But I was under the impression that you were claiming that it was not fundable by concessional loans.

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Hasbeen,

I wasn't on the grass!

Have you got any evidence that most of the rise in your power bills was due to the feed in requirements of renewables? It's certainly a factor, but AIUI there are three much bigger factors:
• the regulators permitting much higher charges for the use of polls and wires
• much higher gas prices
• profiteering by electricity retailers
• profiteering by the power generators

The last reason appears to be most to blame for SA's recent high prices – see http://reneweconomy.com.au/2016/how-gas-generators-cashed-in-on-south-australias-energy-crisis-96642

Aidan,

I never said anything of the sort. Concessional loans can be given out, but as a cost to taxpayers they are limited and hard to get. I was giving a best case scenario for wind power, and even then they are not profitable without huge in feed subsidies.

Secondly, of course generators make huge profits during peaks, and have been doing so for decades, the fuel costs are at the highest, and it is an incentive to bring on as much generation as possible. It makes up for the losses the generators make during low periods, and in spite of this several generators have gone out of business.

Shadow,

Looking at your "best case scenario", apart from your typo (you said it would generate about 7000 MWhrs each year, but it's actually ten times that) one thing in particular stands out: $100m is VERY expensive for a 30MW capacity wind farm.

Actual cost figures for some Australian wind farms can be found at http://ramblingsdc.net/Australia/WindPower.html#Capital_costs_of_wind_power

The main problem in SA is that the high costs aren't acting as an incentive to bring on as much generation as possible. There's a much stronger incentive for them to keep prices high by not bringing on all their generation. It's a version of the tactic Enron was notorious for.

The problem was worst in 2001, just after privatisation, when it led to brownouts and rolling blackouts. They addressed the problem by setting a maximum price and encouraging the generation companies to get involved in electricity retail. That (plus construction of a second link to Victoria) ended the supply reliability issues, but evidently the underlying problem remains, though at least it's confined to those days that are neither sunny nor windy.

Aidan,

Again you misquote me! I was doing monthly calculations not annual.

$100m not only includes the generation, but the cost of connecting it to the grid. The cost of the generation is roughly $4m per 2MW turbine, so 15 turbines will cost about $60m and the cost of upgrading the grid to take 30MW would be in the region of $40m on average. ($10m for the switchyard and transformation plus $600 000/km for 132kV power lines.)

Of course, as the lines are owned by the transmission companies, they are not reflected in the capital cost of the wind farm, but, make no mistake, the transmission companies don't make a loss, and easily cover their costs with transmission charges.

The problem with wind and solar having a guaranteed feed in is that it requires the other generators to ramp up and down rapidly. This clearly does not work for coal fired plants, and the main coal fired plant was making a loss and shut down. This left SA at the mercy of the high cost gas generators. All a sign that a renewable mix above 30% is a bad idea.